The following is a list of parts. This table does not represent how much I actually spent on the project, as I bought many things that I ended up not using. For example, I bought a $30 PQFP-BGA adapter because I did not think the $3.80 one from the Czech Republic would arrive in time. I ended up waiting for the adapter from the Check Republic, because it was so much easier to deal with in terms of soldering. Overall I must have spent over $200 on parts alone, with another $50 or so in shipping.
My development environment was a Sun Ultra 60 workstation with a SunPCI card installed. The SunPCI card is a co-processor board that contains it's own x86 subsystem, allowing me to run Wintel applications from my Ultra 60. This was particularly useful because many AVR tools, such as PonyProg, run on Windows only.
I used emacs to code in C, and avr-gcc to compile. PonyProg was used to download the firmware onto my AVRfrom the SunPCI card. I had an additional laptop to display serial debug output (since the SunPCI only has one serial port), and also wheeled an HP Infinium Oscilloscope into my office.
Click here for a look at my environment.